5 Big Companies Set to Report Earnings on Aug 04 - What Awaits the Stocks

Q2 earnings season is in its full swing. Equity enthusiasts are hooked on to the quarterly reports released by the companies to make better decisions on how to alter their holdings and companies in their portfolio.

Typically, the busy earnings period for second quarter kicks off near the 20s of July and continues through the second week of August.

Per FactSet data as of July 30, 2021, out of the 59% of S&P 500 companies that have reported actual results for Q2 2021, 88% have delivered a positive surprise for earnings per share or EPS and 88% have presented a positive revenue surprise.

Analysts assess the earnings reports based on estimated earnings and revenues and other financial metrics. The estimates are calculated via financial modelling techniques.

As soon as reports are publicized, the analysts know whether the performance is good, or things are looking downhill for any company. Mostly the companies report either Before Markets Open (BMO) or After Markets Close (AMC). The changes in share prices take effect accordingly.

In case the reported EPS and revenues beat the estimates, the company is said to have provided a positive surprise and it is generally seen that the markets react positively to the company’s stock.

Investors gain confidence, and share price is likely to increase after the company delivers a positive surprise.

However, if the company misses the estimates, the opposite is likely to happen, and the share price might fall. Analysts perceive that something is wrong and that is why the targets couldn’t be achieved. Investors lose confidence, and it does not bode well for the stock performance.

Fundamentally, let us explore the factors likely to have set the tone for the impending Q2 earnings results on Aug 4 for these notable five stocks:

CVS Health Corporation (CVS)

: The company reported first-quarter 2021 adjusted EPS of $2.04, up 7% on a y-o-y basis. Revenues improved 3.5% to $69.09 billion at the same time.

The momentum in growth in Specialty pharmacy revenues which increased 7.2% year over year in first quarter is anticipated to have continued in the second quarter, driven by brand inflation and net new business wins. Strength in COVID-19 vaccinations and diagnostic testing holds promise.

The company had also raised its full-year guidance during Q1 earnings call, which induces optimism.

General Motors Company (GM)

: The company reported first-quarter 2021 adjusted EPS of $2.25, soared 262.9% on a y-o-y basis. Revenues declined 0.6% to $32.5 billion at the same time.

General Motors sold 688,236 vehicles in the U.S. in Q2 of 2021, which marks an increase of 40% y-o-y. It was driven by strong customer demand. However, low inventories resulting from the global chip shortage, limited growth.

Moreover, the company and its joint ventures maintained robust momentum in China in Q2, delivering more than 750,000 vehicles, up 5.2% y-o-y. The growth was backed by prime selling of luxury and premium vehicles, midsize/large SUVs and MPVs, which includes the Cadillac CT5 and XT6, and Buick LaCrosse, Enclave and GL8 family. Sales of new energy vehicles (NEVs) also posted a solid performance.

The strong momentum across the U.S. and China makes us enthusiastic on the company’s impending Q2 results.

Uber Technologies, Inc. (UBER)

: The company reported first-quarter 2021 net loss per share of 6 cents, narrower than the year-ago loss of $1.70. Revenues declined 11% to $2.9 billion on a y-o-y basis.

Recovery in Uber’s ride hailing operations led by easing out of coronavirus-led shelter-in-place guidelines and accelerated vaccination is expected to have favored the performance of Mobility segment in Q2.

Moreover, strength in delivery operations backed by pandemic led surge in online order volumes is likely to have bolstered Delivery gross bookings, boosting investor confidence. Delivery Gross Bookings in Q1 of $12.5 billion surged 166% y-o-y.

Nevertheless, increasing investments on drivers and platform in Q2, are likely to have impeded margin expansion.

Roku, Inc. (ROKU)

: The company reported first-quarter 2021 EPS of 54 cents compared with loss of 45 cents in first quarter of 2020. Revenues surged 79% y-o-y to $574.2 million.

Focus on increasing original content and expanding content partner base are expected to have bolstered premium subscriber base and active users in Q2.

Growing clout of The Roku Channel and enabling third-party streaming channels is helping the company boost per-user engagement. This, in turn, is likely to have strengthened advertising revenues in Q2.

MetLife, Inc. (MET)

: The company reported first-quarter 2021 EPS of $2.20, up 39% on a y-o-y basis. Total adjusted revenues of $16.7 billion, improved 8% at the same time.

Increasing variable investment income, momentum in expense management, and synergies from major accretive acquisitions is likely to positively reflect in the impending Q2 results of the insurer.

Also, efforts to reduce costs and enhance efficiency, is expected to have favored margin expansion. Further, strength in capability to generate solid free cash flows keeps us optimistic. Notably, the company anticipates generating nearly $20 billion of free cash flow over 2020-2024. The company also increased its quarterly dividend payment by 4.3% in April 2021 to 48 cents per share.

Let us know if you are looking for detailed earnings analysis for any stock.